From strictly a scalability standpoint, I don't think so. Bitcoin debit cards are usually used for services that don't accept Bitcoin to begin with, so there wouldn't be on-chain transactions anyway with or without their help. I guess it could be argued that they make fiat conversions less frequent, but a person can just as easily just convert a big amount directly to fiat all at once.
Are those services good for the ecosystem in total?
For now. They at least provide alternative mode of payments by making Bitcoin compatible (and I use this word very loosely) with legacy systems. If things go well, they'll be obsolete in the future.
How does it all work? Who gets the processing fees from the merchants running the Point of Sale?
I'm not sure about Coinbase's service, but you normally use Bitcoins to top them up and you end up with a fiat balance. It functions as a normal prepaid card from that point on.
Who gets the processing fees from the merchants running the Point of Sale?
Still the banks. You're using a run of the mill payment card as far as the merchant is concerned.